I’ve gone on about Sharesave before, and I was also an avid customer of the Employee Share Incentive plan, particularly as I was on my way to becoming an ex-employee 🙂 Both of these schemes are designed to foster share ownership among the proletariat. Being a lumpenprole, of course, I don’t get to establish the sort of holdings that can depose the CEO, but nevertheless, sharesave was a way to take a one-way bet on the shareprice from post-tax pay for up to £250 a month, and ESIP let me buy shares in The Firm from pre-tax income, and formed part of my plans to reduce my taxable income to below the tax threshold this year. It’s also surprising how much of a holding builds up over time, even in ESIP with it’s low permitted savings limit of £125 pcm as the rapacious hands of the taxman get held at bay. When I started saving in ESIP in the early 2000s that £125 allowance was worth a bit more than it is now. The £250 limitation on Sharesave is also ridiculous – my first Sharesave was in the 1990s, when that was more of a challenge, the real value of that savings allowance has halved since then.

Up till now I’ve had a policy of outing ESIP shares as soon as practicable after the five-year embargo, on the grounds of minimising my exposure to The Firm – you don’t want to take a pasting on your shares at the same time as your employer makes you redundant, as former employees of Railtrack, Northern Rock and Enron can testify. I’ve also studiously avoided The Firm and its sector in my ISA, on the grounds that I have enough exposure through employment, Sharesave and ESIP. However, The Firm fits into a HYP, and if it’s good enough for Neil Woodford’s top ten then it’s good enough for me once these special circumstances fall away.

On becoming an ex-employee all these shares become unembargoed, and all of a sudden a great lump of these ESIP shares come lumbering out, tax-free. At the same time, one of the Sharesaves is due to mature. Ordinarily I’d have given the instruction to take the option and sell immediately, to minimise my exposure to my employer while taking the three times uplift in price on the option price. However, this time, I will take the shares as a share certificate, and try and shift this into my ISA. Sharesave shares are one of the few exceptions to the general principle that you can’t transfer shares into an ISA unless they come from another ISA. However, they do take up part of the yearly ISA allowance, unfortunately valued at the time of transfer rather than the original option price 😉 That helps with capital gains tax. Although I don’t want to liquidate all these shares or even most of them, I probably have to do something to avoid a serious hit on portfolio diversification.

ESIP shares have to come out of the ESIP account but can only be transferred to a normal dealing account. All in all I will end up with nearly half of my total shareholdings in The Firm’s shares. The good news is that The Firm is a decent dividend payer, and indeed I get to more than double my stock market capital base, so I now have an annual income that roughly matches the dole. The bad news is that more than half of my shareholdings by value are The Firm’s shares. The firm is riding high at the moment for some reason, and I am losing hand over fist on my shorts, which is fine by me. I’ve acted much more like the fictitious Ermevator in that story in that I doubled up on the amount of ESIP shares I bought and slammed the brakes on selling ESIP shares as soon as it looked likely that I would no longer be an employee of The Firm.There seems to be something about leaving The Firm’s employment that makes me a lot less equity risk-averse, which is kind of irrational. I’m not yet ready to sign up to Ernst and Young’s Indian Summer and indeed have more feeling for Dr Doom’s viewpoint in that there’s a lot of incoming for the next year. Some things have got to get worse before they get better, and if Dr Doom gets his request of policymakers letting the bust work its way through the system like a dose of salts then perhaps there is hope for capitulation and then some resolution.

I have to discharge those shorts or roll them over in September, however, I will hang on to them until The Firm’s shares go XD and the Sharesave scheme matures. The maturity notice did warn that so many of The Firm’s employees will be selling shares at the maturity and that it may take several days to sell all the options, so now is probably not the time to close the short 😉

[…] rather than cash, but I now have an additional challenge in the form of a share certificate from one of my sharesave schemes that I want to shift into the ISA. I don’t dare put any money or stock into the TD ISA while […]